Friday, October 27, 2006

It's debatable whether this is actually a BAD thing, but...

I seem to be unable to think about getting extra money in terms of actually spending it. When I get money from surveys or whatever in my Paypal, I think "Oh boy! I can put this in my emergency fund!" When I got all the money from DealBarbie and friends, I thought "Oh boy! I can pay off my credit card!"

And now when I am thinking about this potential new job (which I was up doing last night not sleeping even though I was exhausted) I think "Oh boy! How much can I put in my 403(b)!"

I think that the crucial point I have come to is that I accept the amount of money I live on now as perfectly fine. Previously, when I had my old second job, Boyfriend and I would do things like go to Olive Garden three times in one week. (Yes, we did.) And when that job went under, and the free flowing extra income was suddenly gone, it was pretty painful to adjust to the new amounts. At first I was hardly saving anything. Then I put $100 a month in my savings account. Then I put $100 a month in my Roth. Then I put $150 a month in my savings. Then I put $50 a month in my gifts account. Then I put more towards credit cards. Then I put $125 a month in the Roth.

Now, out of a take home of about $1850 a month, I spend about $550 on bills and rent, and budget about $600 for everything else.

Where does that extra $700 go? Well, at least $200 goes towards savings, and the rest goes towards the student loan, the credit cards, the Roth, or more towards savings. I think that this represents a pretty major shift in my basic financial thinking - that saving money and paying down debt really is the major item in my budget, instead of an afterthought. I think that this has started to pay off nicely in my net worth - while I haven't done as well as I could, my net worth has gone up a little over $3,000 since I started blogging in June. This is partially because I am working in both directions - paying off debt and accumulating more assets. Starting CashDuck was a bit of a drain on the ol' net worth but I should be putting it back quite soon.

So I think it's a pretty good thing that the first thing I thought of when contemplating a new, higher salary was, "Oh boy! How much money can I save?" instead of "Oh boy! We can go back to eating at Olive Garden every week!" More money is an opportunity to save, not an opportunity to spend.

7 comments:

Sarah said...

But the breadsticks are so good :-). Ha! I totally agree with you, but ironically I went to Olive Garden last night!

HC said...

$550 on bills AND rent? Damn straight you should be saving with that little outflow! [grin]

In all seriousness, that's a great mindset to get into. You should be proud.

Kira said...

Well, I should have stated that about $220 is minimum payments alone on the cc and student loan. So I guess those would be counted as bills.

I keep it pretty cheap, living with Boyfriend and not owning a car. =) My half of the rent is $347 and I pay for gas, electric, and half the cell phone bill.

GolbGuru said...

increase in net worth ($3000) in 5 months is awesome job for the salary you are drawing. you should be pretty happy with it.

You say "$600 for everything else" what does that include? Thats a pretty large amount for "everything else" :)

Trent said...

That's THE mindset to have, darling!

Have you considered saving a bit less and work harder getting rid of that nasty credit card debt? My feeling is that once you've crossed the line of two months worth of "take home" in the bank, now is the time to start getting rid of that credit card debt.

I was more than $15,000 in the hole with credit card debt and I turned in my final payment early this month. I can't even describe the weight that was lifted from my shoulders (and now I have $400 more a month that I can save).

Bob said...

I second getting rid of the nasty cc debt. This is a real wealth killer. You're paying to use money, when you could be building wealth by investing that same money. People should be paying YOU!

Kira said...

The credit card debt is at 0%, so even my student loan is higher. I do pay extra towards the credit card, I just don't consider it a priority since anything else is a higher return.